Upsidedown mortgage, need advice, please help!

[sarahlaila]

Okay I know this is not financially sense but I'm not seeing another way out and would love some opinions. We have an 80/20 mortgage from 2004. We are underwater most likely
By $20000 which is about how much is left on the 20% Heloc portion which is currently at 6% interest rate. I have a 17000 personal loan at 13%. I was planning on paying off the personoal loan in 2.5 years. However I can't refinance or sell my home since it is underwater. If I put all the extra mo ey towards they Heloc I could get my home closer to market value. Perhaps then sell it or refinance and rent it out. We really want to move into a bigger home for our growing family and feel trapped.
I know I will pay more interest but maybe this way I can sell and not have to be a landlord and stress over two mortgages. Thanks for any advice.
Sarah

[sarahlaila]

Bump in case anyone wants to share some advice.

[Anonymous]

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@sarahlaila wrote:
Bump in case anyone wants to share some advice.

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Sorry to see you in this situation. While being 20K underwater seems like a lot it isn't as bad as many others. 

Your idea would work but is it worth the cost?

Many people in the same situation are either stuck sitting it out until the market gets better, or doing something just like you are thinking to get out from under it. But you really have to weigh the cost and if it is something really worth while to do. Maybe get the funds another by having a garage sale or something to that nature. If you can make some extra money part time to help even if delivering pizza's. Those are a few ideas for extra cash to help pay down mortgage.

If you decide to keep it and rent it, some lenders will want to see the income generated for atleast a few years (varies with lenders) before approving you for another home loan.

[Anonymous]

You don’t really share much about your situation…presumably you have decent credit if you are looking at a bigger house and are making the payments.   How would the stress of having a larger mortgage payment for the bigger house compare to the stress of being in the smaller house?

If I were in your situation I would absolutely pound away at that 13% loan (part time job, sell things, sell your car, rice and beans for dinner every night, etc) and possibly look at getting a refinance on the current place.  I have a feeling you could cut that 2.5 years in half pretty easily.  At that point your cash flow, and perhaps the value of your house, will be much better and open up a few doors for you.

Renting your place out has a lot of risks.  One bad tenant could bring you to financial ruin.

[sarahlaila]

Both of our fico scores are from 740-770. The personal paid off all of credit cards and we have been putting all extra money towards paying it down. Income is about $115000. Both if our credit reports are clean. We would like to buy a home from about 165000,-180000 with four bedrooms and fenced yard. Right now we pay almost $1150 right now between mortgage, HOA and a storage unit. Right now town homes are not selling and sitting for months plus foreclosures have brought values down so much.
Sarah